A growing number of Polish citizens are choosing to work or do business abroad, also including the United Arab Emirates, especially in Dubai. Despite this, many people decide to return to Poland for various reasons, including family situation, better educational conditions for children or ties with the homeland. For an entrepreneur, who previously ran a business in Dubai, returning to Poland involves certain formalities. In this article, we will discuss what formalities need to be completed when planning to return from Dubai to Poland to regain the tax resident status and to continue running a business in Poland.
Notification of return to Poland
An entrepreneur who has decided to return from Dubai to Poland must register their residence in the city hall or municipality office competent for a given place of residence. The notification of return will be relevant for determining tax residence, as the tax offices examine compliance with formal obligations in the first place. It is worth remembering that registration for residence in Poland is mandatory! In addition, a correctly completed notification of a new address, after returning to Poland, in the tax office, should be submitted by an entrepreneur in due time, i.e., within 7 days of the change of address.
Regaining the tax resident status
As a rule, an entrepreneur who has stayed abroad for more than 183 days, during a given fiscal year, may lose their Polish tax residence, if they additionally fail to meet the condition of having personal or business ties in Poland. At the same time, the loss of tax residence in Poland is also considered in the context of the Double Tax Avoidance Agreement with the UAE. It is worth knowing that this agreement makes obtaining tax residence on the territory of Dubai contingent on holding citizenship. In practice, this means that if you have obtained tax residence in Dubai and, at the same time, have not lost your tax residence in Poland, you will remain a Polish tax resident until you obtain citizenship of the United Arab Emirates. Regardless of the above, the change of residence should start with the preparation of documents confirming the return, such as airline tickets, apartment rental agreements or utility bills. It is also worth having documents confirming the source of income in Dubai, e.g., contracts, invoices, bank statements.
Continuation of business operations
If an entrepreneur, who has so far conducted business in Dubai, would like to continue such an undertaking while residing in Poland, they should register their business operations with the tax office and pay taxes in Poland. This does not change the fact that an entity registered in Dubai may remain as part of the business structure if the purpose of its business activity does not change. In the case of entrepreneurs who have run a business in Dubai, it is also important to become acquainted with the Polish tax system and the rules of conducting business activity, about which we wrote in detail in the e-book “Powrót do Polski. Na co uważać przeprowadzając się z Dubaju, USA, Hiszpanii, etc…?” (“Return to Poland. What to watch out for when moving house from Dubai, USA, Spain, etc…?”)
Taxes on foreign income in Poland
In Poland, many regulatory changes have been introduced in the last three years, which have resulted in much better tax conditions for returning entrepreneurs and investors than in many other European countries. Poland offers relatively low personal income taxes for business owners and special solutions for advanced property structures in the form of a holding company and a family foundation, which benefit from very attractive tax exemptions.
Entrepreneurs and investors returning from Dubai to Poland can choose many solutions, but they must remember to satisfy certain formal conditions. If you want to benefit from, for example, a flat tax on foreign income, which allows you to be exempted from foreign income taxation for 10 years, provided that you have not resided in Poland for the last 5 years, you should submit a statement to the tax office on the PIT-PZ form, by the end of January, in the year following your return to Poland. An important step in completing the formalities is to notify relevant institutions, e.g., the bank, of your address of residence. We also write more about this in the above-mentioned e-book.
Tax relief for the return to Poland
It is also worth becoming acquainted with the so-called return tax relief, which exempts the taxpayer from income tax for a period of 4 consecutive years from return. The amount of the relief in each year is PLN 85,528. In order to benefit from it, an entrepreneur must meet several conditions. First of all, they must have a place of residence on the territory of Poland. In addition, they must have the status of a tax resident in Poland and earn income from business operations in Poland. The relief can be applied already during the year, but the final settlement is made in the annual tax return.
The tax relief for the return to Poland is a good solution for entrepreneurs who want to continue their business in Poland and, at the same time, minimize the costs associated with the return and development of their company. You can also find out more about this relief in our e-book.
What else should you pay attention to when returning from Dubai to Poland
However, for the entrepreneurs who decide to move their tax residence to Poland, it is important to pay attention to certain issues that may affect their tax situation.
Such entrepreneurs should be aware that, being in possession of certain financial assets, such as funds in foreign bank accounts or shares of foreign companies, they may be obliged to submit reports to relevant institutions. Such reports shall be made on the basis of the provisions of foreign exchange law.
In addition, Polish tax regulations are complex and require a thorough understanding, especially in the case of entrepreneurs moving their tax residence to Poland. For this reason, entrepreneurs should turn to a tax advisor who will provide them with assistance in understanding and completing the required formalities and will help avoid unnecessary trouble with the Polish tax office.
A brief summary
In conclusion, the “return tax relief” and the flat tax on foreign income are favourable solutions in the Polish tax system, encouraging entrepreneurs to return to Poland and settle on its territory. However, entrepreneurs should be aware of certain issues, such as notifying relevant institutions of financial assets outside Poland or the correct taxation of foreign income, which may affect the adoption of specific solutions in a given situation.
Therefore, your return requires proper preparation and consideration of many legal, fiscal and administrative issues. It is worth getting acquainted with the requirements and regulations in advance to avoid unpleasant surprises and effectively manage your business in Poland and abroad.